What is Jonathan Crowley portfolio alpha

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Question - Jonathan Crowley is a portfolio manager for a large pension fund. Last year his portfolio had an actual return of 14.5% with a standard deviation of 20% and a beta of 1.5. The market risk premium for this period of time was 7% and the risk-free rate of return was 3%.

1) Based on the Capital Asset Pricing Model (CAPM), what is the required rate of return for this portfolio?

2) Does Jonathan's portfolio plot above or below the security market line?

3) What is Jonathan Crowley's portfolio alpha? Based on your calculation, is he a good portfolio manager?

Reference no: EM132778679

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